For more information about Vanguard funds, visit vanguard.com or call 877-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss.

Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. Stocks of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.

All investing is subject to risk, including the possible loss of the money you invest.

A few years ago, while buying wine for a friend’s party, I found a reasonably priced cabernet sauvignon produced by Bogle Vineyards. I work at Vanguard. How could I resist? A clerk assessed my selection and, I kid you not, pronounced it a “good value.”

What’s in a name?

In the past year, Vanguard crew members (as we call ourselves) have labored in Vanguard’s figurative vineyards, founded by a different Bogle some 40 years ago, to produce “good value” for the millions of investors who are saving for a secure retirement, a child’s education, or any of the other financial goals that lead to a better life.

We’ve uncorked new services. We’ve decanted expense ratio reductions. We’ve added new funds to the Vanguard cellar. And we’ve enhanced one of our most popular blends, the Vanguard Target Retirement Funds—diversified portfolios of index fund “varietals” that help working Americans prepare for life beyond the 9 to 5.

New notes in a well-balanced blend

At the end of 2014, 45% of the participants in retirement plans administered by Vanguard invested solely in a target date fund such as a Vanguard Target Retirement Fund or other professionally managed asset allocation. In 2009, the total was just 25%.

This change has helped address a big problem in workplace plans: inadequate diversification. The same participants whose portfolios once held all cash, all stock, or all company stock now diversify across global stock and bond markets, with portfolio risk levels calibrated to their expected retirement dates.

In February, Vanguard’s vintners increased the Target Retirement Funds’ allocation to non-U.S. stock and bond market varietals. The greater diversification is intended to moderate the funds’ expected volatility while preserving their expected returns. The new blend adds notes of opportunity and undertones of noncorrelation to a series of funds that has helped retirement savers diversify their portfolios since 2003.

How to find the best complements to your own financial goals? In 2015, Vanguard introduced Personal Advisor Services (PAS). Our new sommelier, a combination of information-age efficiency and old-school humanity, can help you select and manage a portfolio of funds tailored to your unique circumstances and objectives. And like a good sommelier, PAS has many skills. It also provides insight and advice on a full menu of financial-planning considerations—tax-management strategies, estate-planning, and more.

I’m enthusiastic about this service. I know my way around a spreadsheet. I can read an actuarial table. I have colleagues, skilled in factor-augmented vector autoregression, who commandeer the Vanguard Capital Markets Model. But still . . . When it comes time to figure out how to make my savings last for decades in retirement, I will seek assistance from a professional who has helped clients like me grapple with the same challenge.

A toast

We all have financial goals, and the Vanguard vineyards offer a variety of funds and services that can help us meet them. So how about a toast? I have just the wine.

Thanks to Christine Kim for her help with this post.

Notes:

Investments in Target Retirement Funds are subject to the risks of their underlying funds. The year in the Fund name refers to the approximate year (the target date) when an investor in the Fund would retire and leave the work force. The Fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. An investment in the Target Retirement Fund is not guaranteed at any time, including on or after the target date.

Andy Clarke

Andy is a senior investment strategist in Vanguard Investment Strategy Group. Before joining Vanguard in 1997, he worked at Morningstar. During his tenure at Vanguard, Andy wrote "Wealth of Experience," an introduction to investing based on ordinary people's stories about what has—and hasn't—worked as they've tried to meet their financial goals. Andy holds a B.A. from Haverford College and an M.S. from West Chester University. He is a CFA® charterholder.

Comments

Ron D. | February 21, 2016 10:04 am

Interesting blog, Andy. Not sure this is the correct forum but here goes. First of all I’m a huge Vanguard fan and a huge Target Date Fund fan. I’m retired and have most of my savings in VTINX, and feel very safe doing so.
In the past I enjoyed watching Suzie Orman and her “shot from the hip” style of personal finance advise. But one of the things I totally disagreed with Suzie on was her stance of TDFs. One of her biggest complaints was that the consumer might disagree with the equity/fixed income mix of a particular fund. I think a point that Vanguard needs to make to their investors is that if you like the concept of a TDF but don’t like the mix for your target year, invest in another target year! Just because you’re retiring in 2040 doesn’t mean you have to invest in a 2040 TDF! If your more aggressive than the equity/bond mix, invest in a 2045 or 2050 TDF. More conservative? Invest in 2030 or 2035 TDF. For the average investor, I think Target Date Funds are the ideal investment options. I firmly believe you need to get the word out on this. Who knows how many investors are out there who want a TDF but don’t like the mix for their target year?

Jack H. | December 8, 2015 3:35 pm

I retired in 1996 and am seventy four now. I have not had to touch my investments to date but would like to invest in a fund or funds that are the safer ones in this economy. Want to find fund that is one to put my investments into and do not have to wory about large volatility
swings. A modest return .It is easy to get overwelmed by the large number of Vanguard funds.

Richard G. | November 19, 2015 11:29 pm

Andy another informational letter and very on point.I am sure that your crew members realize that they are getting thousands of call from retirees and also actively working Vanguard types who are running the whole financial spectrum in their financial lives.What is one investors forte is anothers achiles heel.I have done an outstanding job I feel in accumulating wealth after almost 45 years.However when I started with Vanguard in 2010 I only had a one horse sleigh. I am only managing IRA money. I do not have any taxable investments and probably won’t until RMD time at 71.That is when I may be calling and getting your assistance from your PAS program. I am a committed long term investor and I love Vanguard. We are working on our 4th Trillion Folkes! Somebodys doing something Right!

Paul D. | November 18, 2015 3:14 pm

A very entertaining and educational blog Andy! Your collaboration with Christine produced an Oenophile’s tour de force of the Vanguard vineyard of investments.

Just as a fine wine has certain constituent elements, such as superior grapes, patient aging in the proper oak and excellent skill in the art of wine making etc., so too, does a bullet proof portfolio which will stand the test of time and deliver when needed.

I hope the younger set reads it and gets the message …. it has never been easier to start building wealth.

i need help. In 4 years I will turn 70. This is when I will have to start getting my minimal distribution retirement fund. What if I only withdraw 1%? Can the remaining funds stay invested in the same stocks or bonds? What goes out first, the stocks or the bonds? How come all my money is taxable? How is it that no one has thought of investing some of my bonds in municipal bonds. I belong to a flagship. You are supposed to help me and guide me but I got no voice to speak, I have to write.
My advisor Ms Basu said to me that certified planners were investing for me. Why they have not invested in municipal bonds or other non-taxable funds? I fear I will run out of money if something is not done on my behalf. I am hard of hearing and I got no voice. Please help me.

Rudene F. | January 31, 2016 12:43 pm

I too cringe at the tax bite. But you either pay tax when funds earned or at distribution. Tax code does not permit exclusion for
Tax free bonds held in IRAs that I know of. Don’t expect tax relief as long as our country is so outrageously indebted. Perhaps
A good accountant could advise you how to handle withdrawals to miminize taxes and preserve your investments. So far we
Have managed but at 84yrs the withdrawals bump us into a higher tax bracket. Good luck,

Carmon M. | November 16, 2015 9:50 pm

I enjoyed this blog and I will read it once more in the hope that I may come closer to making the transaction I know I should make during what likely seems to be a brief change in the long bear market. The blog also reminded me I should be taking a closer look at the Personal Advisory Service. I coach well and would not be dragging my feet as is the case now.

I especially enjoyed the comparison of Bogle Winery with Vanguard’s “different” Bogle. I too have marveled at the similarities. I have enjoyed Bogle wine for a very long time and as with Vanguard it is the recognized value leader in it’s field. Good people in both organizations, and I am grateful for that.

Carlton S. | November 16, 2015 6:59 pm

I agree with you more about Bogle wine being a good value than I do about the Target Retirement funds, now that they have taken on very substantial percentages of foreign stocks and bonds (and have modestly under-performed competing retirement funds this year since doing so).

While I still think that Vanguard’s Target Retirement funds are a good choice for unsophisticated investors in their retirement plans, people who want balanced funds should compare the records of Vanguard’s Wellesley and Wellington Funds. They have delivered greater returns with less volatility over at least the past 10 years, as shown in the “price and performance data” on Vanguard’s web site. In looking at their portfolios, I see no indication that either is investing in foreign securities to any substantial extent.

Of course, past performance can be a poor indicator of future performance, but I prefer to keep my investments in foreign securities much smaller than my investments in U.S. securities (which are mostly in Vanguard’s index funds) and separate from them. I also prefer to keep my investments in short-term bonds (via Vanguard’s funds) separate from balanced funds, where I can cash them out without simultaneously reducing my holdings of stocks and longer term bonds.

Chris W. | November 16, 2015 5:09 pm

How any advisor at Vanguard worth his or her CFA can advise clients to invest in bonds or pure bond funds at this juncture (just before the Fed begins to raise interest rates) is beyond comprehension. The rates on existing bonds and bond funds are relatively very low (and their prices correspondingly relatively high), reflecting currently very low Fed rates. Holders of those bonds will, of course, obtain interest income corresponding to the rates in effect at the time of purchase and are in the happy state of either continuing to receive this income or selling the bonds at the high prices. Those high prices will inevitably drop as the new Fed interest rates rise, however, but to what level? 2%? 3%? Best to wait and see… or rely on the nimbleness of advisors moving money around in such mixed funds as the Wellington or Wellesley Fund to protect those Funds from serious price deflation.

John M. | November 16, 2015 4:36 pm

What's your opinion?

Vanguard welcomes your feedback on this blog, but please read our commenting guidelines
first. Comments will be published at our discretion. Questions or comments about your Vanguard investments or customer-service issues? Please
contact Vanguard directly. Opinions expressed in blog comments are those of the persons submitting
the comments, and don't necessarily represent the views of Vanguard or its management.

You might like

Twitter

For more information about Vanguard funds, visit vanguard.com or call 877-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

Investments in bond funds are subject to interest rate, credit, and inflation risk.

Diversification does not ensure a profit or protect against a loss.

Investments in stocks or bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. Stocks of companies based in emerging markets are subject to national and regional political and economic risks and to the risk of currency fluctuations. These risks are especially high in emerging markets.

All investing is subject to risk, including the possible loss of the money you invest.